Private equity and venture capital firms have welcomed new guidelines from the Securities and Exchange Board of India (SEBI) which state that investment firms can invest in foreign companies even if those companies do not have connection with India.
Previously, Indian venture capital firms could only invest in foreign companies that had an office in India. “AIFs (Alternative Investment Funds)/VCFs (Venture Capital Companies) may invest in securities of companies incorporated outside India subject to such conditions or guidelines as may be issued by the Reserve Bank of India and SEBI from time to time. The requirement for the foreign company to have an Indian connection has been removed,” SEBI said in a circular earlier this week.
A much-needed relaxation
Commenting on the new guidelines, Bala C Deshpande, Founder and Partner of MegaDelta Capital, said, “SEBI’s latest guidelines are both timing and market driven given that there are good companies based overseas but with significant operations in India. We welcome the progressive thinking around AIF funds and believe that clear frameworks provided on an ongoing basis by SEBI help our industry immensely.
MegaDelta Capital is an India-focused mid-market growth fund that typically invests $15-25 million in growth capital into companies. Some of its beneficiary companies include Firstcry, Nova, GoQii, Moneytrap, Naaptol among others.
Suitable for the market
Adding to this, Dhianu Das, co-founder of Agility Ventures, said: “The latest SEBI guidelines are a much-needed relaxation of standards for AIFs (alternative investment funds) and VCFs (venture capital funds). . Providing proof of connection to India was a task for VCFs and AIFs to obtain SEBI approval and often resulted in lost opportunities.
The relaxation of this requirement is a major relief to fuel innovation and create value for Indian investors. With the current geopolitical situation, this new update will guarantee a lot more investments to come.
A network of angel investors, the Agility Ventures network invests in start-ups or start-ups in sectors such as education, technology, healthcare, e-commerce, automotive, electric vehicles, robotics, agro-technology and manufacturing, among others.
SEBI also noted that OFIs/VCFs should not invest in a foreign company, which is incorporated in a country identified in the Financial Action Task Force (FATF) public statement as a jurisdiction with a strategic anti-corruption objective. money laundering or the fight against the financing of terrorism. deficiencies to which countermeasures apply or a jurisdiction that has not made sufficient progress to address the deficiencies or committed to an action plan developed with the FATF to address the deficiencies.
August 21, 2022